The labor shortage caused by the big resignation has hit small businesses hard, forcing employers to scramble to find new ways to attract and retain talent. An increasingly popular way to do it? Pay workers faster, or immediately.
Eighty-three percent of employees believe they should have access to their earned paycheck at the end of each day, rather than having to wait until the end of the two-week payroll cycle, according to a Harris poll conducted for human resources and payroll company Ceridian. Seventy-nine percent of those polled said it would make them feel more valued as an employee.
Read more: Your payroll needs a makeover? How Access to Earned Wages Can Help Employees Take Financial Control
“We started looking at pay-on-demand in 2018 and 2019, and the adoption of these solutions was very anxious,” said Evelyn McMullen, head of research at analyst firm Nucleus Research. “But now it’s becoming a table-top issue, and we see it becoming a competitive advantage for companies that hire hourly workers. “
For employees, access to earned wages gives them the ability to use the money they’ve already earned in the event of emergencies, surprise bills, or other unexpected financial situations. Access to earned wages can also eliminate the need for payday loans, which can carry considerable interest.
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Earned Payroll Service Providers like PayActiv, Branch, and Tapcheck can integrate seamlessly with most payroll systems, eliminating some administrative headaches for businesses and providing employees with the tools they need to help them budget and save money. This can go a long way in helping workers feel supported by their workplace: The Harris survey found that 78% of employees said access to free on-demand pay would increase their loyalty to an employer.
As with any new system, adoption and implementation can be a challenge. And for small businesses in particular, McMullen says, accessing earned wages can seem like a daunting change.
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“A lot of the advertising around pay on demand comes from the larger vendors who typically serve corporate customers,” she says. “So it can be a little intimidating for small businesses. But the reality is that there are vendors out there that will integrate with most payroll systems that small businesses may already be using, so there really aren’t many barriers to access.
In addition to supporting the financial health of their employees – now and in the future – adopting these new tools can help prepare a business for its own future success, McMullen said. As more and more small businesses adopt HCM technology, they will be configured to easily implement Earned Payroll Access solutions.
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“It’s really a turning point for small businesses to digitize payroll,” says McMullen. “As small businesses begin to take advantage of payroll technology and human resource management, they will be able to enjoy these kinds of benefits. “